KEY POINTS:
Indulging in a bit of chart-gazing, Stock Takes sees that as measured by a 14-day moving average, which strips out much of the day-to-day volatility, the NZX-50 has been making some upward progress in the last little while - for the first time this year.
Readers will recall
that frequently when overseas markets were in something approaching free fall, "our plucky little bourse", as one blogger dubbed it, resisted much of the negative pressure.
So how has our benchmark index performed overall this year against others? We're down about 11 per cent, while in Australia, where the still-booming resource stocks haven't offset the beating that banks and investment companies have received, the ASX-200 is down 14 per cent.
But then take a look at the UK. With its big financial stocks including high-profile casualty Northern Rock, you might expect the FTSE-100 to have suffered badly from its exposure to the US sub-prime and credit crunch. Actually, it's down less than us at 9 per cent.
The Standard & Poor's 500 in the US, where this whole mess began, is also down just 9 per cent; the Dow Jones Industrial Average is down 7.5 per cent. It goes to show that "decoupling" aside, when the US economy catches a cold, New Zealand and Australia are still going to get the flu.
FUND FRUSTRATION
In the mood for quick international comparisons, Stock Takes spied a report on the performance of UK managed funds being dented by the recent equity market losses.
"Thousands of investors in some of Britain's biggest and most popular funds have been hit worst by the stock market downturn," Reuters reported.
No surprises there.
In fact, the Business Herald has carried similar stories in relation to our local funds, including fledgling KiwiSaver products and indeed the New Zealand Superannuation, or "Cullen" Fund.
Stock Takes readily acknowledges that it is long-term performance rather than short-term ups and downs that really matter when it comes to these things. Let's look at active funds that invest in equities on their local market, bearing in mind that UK and Australian returns are gross while those for New Zealand are net of tax assumed to be 33 per cent.
According to UK website Trustnet, actively managed UK funds returned on average negative 5.8 per cent over the last year against a fall of about 7 per cent in the FTSE over the period.
Morningstar data on Australia's much vaunted managed funds industry reports large cap Australian equity funds returned negative 1.9 per cent against a 2 per cent fall in ASX-200.
Data from Fundsource showed net returns from New Zealand active equity fund were negative 9.8 per cent return for the January year against the NZX-50's fall of 12 per cent.
What clearly emerges from all of this, apart from the fact that the last few months have been hell for investors, is that active management doesn't appear to add all that much to returns.
DOWN BY LAW
The new disclosure rules for financial advisers which came into force at the beginning of the month are going to take some getting used to. One broker Stock Takes spoke to asked that if he was quoted in a Business Herald article, we'd have to append instructions on where to find his disclosure statement to the bottom of the story.
Securities Commission director of primary markets Kathryn Rodgers assures us this is not necessary.
"If you're a broker and you get phoned up out of the blue by a reporter and get asked to comment, then in our view you're not giving advice to a particular member of the public that's governed by the disclosure requirements."
However, Rodgers says brokers or advisers with regular columns or TV or radio spots probably will have to make reference to their disclosure statements if they offer advice on particular investments or tout for customers.
Stock Takes is just pleased that journalists themselves are not counted as financial advisers, as was mooted in the early stages of the review that led to the new rules, and agrees with a former colleague's view that the best financial advice a business reporter can give is, "don't take financial advice from a business reporter".
COTTONING ON
Sir Ron Brierley's Guinness Peat Group was a local blue chip which came out with a pleasant surprise in its result.
Full-year net profit was up 258 per cent on a year ago, mainly thanks to the realisation of its craftily accumulated Australian Wealth Management stake and also its Premier Investments holding.
But that was merely the cherry on top. The highlight, as Goldman Sachs JBWere analyst Rodney Deacon notes, was encouraging signs from Coats, the huge multinational threadmaker which has probably been as easy to turn around as a supertanker.
GPG has spent a lot of time and money on Coats and the biggest news around the investment last year was the potential $235 million fine for the company's part in an alleged cartel in the European zip market.
The news was much happier last week, with Coats' operating profit up 29 per cent, on rising sales and profits in its main industrial threads division and a healthier performance from the crafts operation.
Deacon is cautiously optimistic about Coats' outlook and believes the market is seriously undervaluing the asset.
Allowing for a worst-case scenario in which Coats would pay the full EU fine, (unlikely, says Deacon), Goldman Sachs has increased its calculation of GPG's net asset value by 2c to $2.37.
Even with the 16 per cent jump in GPG's share price since it released the result last week, at $1.67 yesterday it was still trading at a big discount to NAV and Deacon rates it a buy.
ILLUSTRIOUS ENERGY INFRASTRUCTURE
Final bids for Vector's Wellington electricity network are expected by the middle of next month and a newspaper reports that Vector has winnowed more than a dozen interested parties down to three, who have now been invited to perform due diligence.
According to the report, these three included Hong Kong company Cheung Kong Infrastructure, and Hastings Fund Management in partnership with Westpac.
Stock Takes hears the third party may well be State Grid Corporation of China, whose overseas investments so far appear limited to a half share in the Philippines national grid.
To be sure, Wellington's electricity network is a hell of a lot less of a strategic asset than Auckland Airport, but given the furore around recent overseas bids for AIA, a fuss could be on the cards should SGCC prove to be a potential bidder.
Of course overseas ownership of local energy assets is not unusual, Contact and Trustpower until recent times were substantially owned by US interests. Contact is majority-owned by Australia's Origin Energy.
But look at the heat, some of it of a distinctly xenophobic hue, generated a couple of years ago by the prospect that Hong Kong company Hutchison Whampoa might have taken a half stake in Lyttelton Port.
As it happens Hutchison Whampoa is one of several of Hong Kong business titan Li Ka-Shing's companies, as is Cheung Kong.
At least some of the opposition to that plan was based on Li's business connections with China's government.
If that worried some people, they're likely to be even more concerned by the prospect that a Chinese firm might get to have its finger firmly on the capital's light switches. Vector shares closed down 3c at $1.85 yesterday.
HOUSE ALWAYS WINS
Lady Luck appears to be smiling again for casino operator SkyCity. The company's recent first-half result was above expectations, which would have been welcome news after its rocky run over the past couple of years.
Research house Aspect Huntley notes that the strong result was helped by a favourable outcome in SkyCity's international VIP business where earnings for the period were $12.6 million against a loss of $1.2 million last year.
2007 was an eventful year for SkyCity with long-time CEO Evan Davies stepping down. It was also tipped that an Asian high roller had taken the house for huge sums before being barred.
On a less glamorous level, Aspect Huntley was encouraged by cost control measures at the Adelaide and Auckland Casinos which helped both to pleasing results despite challenging business conditions including "an adverse macroeconomic environment in New Zealand" and the gaming floor refurbishment in Auckland.
Aspect Huntley expects earnings from Auckland, which contributes 67 per cent of group ebitda, to accelerate once the refurbishment is completed this month.
The firm thinks SkyCity management's reaffirmed guidance of $108 million to $110 million in full year net profit is a tad on the conservative side due to the better than expected first half and anticipated lift in second half earnings.
It values SkyCity shares at $4.40 against yesterday's close of $3.99.
